South Korean prosecutors have decided against pressing charges against a commercial bank for issuing a letter of credit (L/C) to the 19-year old daughter of Choi Soon-sil.

Choi was former president Park Geun-hye's confidante who was jailed for 20-years in a corruption scandal that precipitated the impeachment of Park last year.

Land collateral

KEB Hana Bank issued a standby L/C worth EUR 386,600 to Chung Yoo-ra in 2014 when she was just 19-years old.

As collateral, Chung put up a 230,000 square metre parcel of land in Korea's Gangwon Province.

Non-resident status

This enabled Chung to take out EUR 385,000 of loans in the bank's branch in Germany while leaving no trace of any foreign currency transactions. KEB Hana Bank regarded Chung as a non-resident of Korea in issuing the standby L/C but the bank allegedly neglected a duty when issuing the document as it exempted Chung from submitting requirements of non-residency such as providing proof of obtaining offshore real estate loans.

Documentary evidence

This raised suspicions that KEB Hana Bank had violated the Foreign Exchange Transactions Act but prosecutors have now decided that the bank did not fail in its duty.

They concluded that a document issued by the Bank of Korea and a copy of the L/C documentation from Chung's office in Germany could be seen as valid prove that she was a non-resident.

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